Revealed: The areas that could benefit most from rate cuts

Discover which property markets across the country could get the biggest boost from rate cuts and why.

By InvestSMART · 27 Feb 2025

By InvestSMART ·
27 Feb 2025 · 5 min read

In a move that was widely predicted, the Reserve Bank of Australia (RBA) began its rate-cutting cycle in February, reducing the cash rate from 4.35% to 4.10%. Despite the RBA board saying it remained "cautious on prospects for further policy easing," many economists are predicting another two or three rate cuts this year.

Three of the four major banks, for example, anticipate three more cuts to the official rate this year. Commonwealth Bank, NAB and Westpac all believe the cash rate will be sitting at 3.35% at the end of 2025. (ANZ is projecting only one more rate cut this year.)

AMP Capital's Chief Economist, Shane Oliver, sits somewhere in the middle, saying, "We expect the RBA to cut again in May and August, taking the cash rate to 3.6% this year, with another cut next year."

Lower rates could potentially drive property prices higher. But what kind of growth could we expect? CoreLogic has analysed the impact previous periods of rate reductions had on property values and estimates that national dwelling values would increase an average of 6.1% for each one percentage point decline in the cash rate. But as CoreLogic's Head of Research, Eliza Owen, points out: "Australia is not one housing market", so some areas will benefit more than others.

CoreLogic compiled the Australian house and unit markets that had the strongest response to cash rate reductions nationally between 2015 and 2019. You can check out the top five from each capital city and top 10 from regional Australia below.

The results show that Sydney and Melbourne houses and units seem to have the most to gain from a reduction in interest rates, while the relationship between the cash rate and home values is far less pronounced in markets across Adelaide and Perth.

"Based on CoreLogic's analysis, relatively expensive markets have historically shown stronger responses to reduced cash rate settings, especially in the house sector," explains Owen. She also notes that the markets to make the list are "generally down from peak values, suggesting they have had a strong response to interest rate rises since May 2022".

Sydney houses

SA3 Name	Modelled value change from a 1pp reduction in cash rate	Median Value Jan 2025	Decline from market peak to Jan 25
Leichhardt	19.1%	$2,329,376	-6.9%
Sutherland - Menai - Heathcote	19.0%	$1,534,943	-2.9%
Warringah	18.1%	$2,413,671	-9.9%
Hurstville	17.7%	$1,762,818	-2.6%
Hornsby	17.5%	$1,675,264	-3.7%

Sydney units

SA3 Name	Modelled value change from a 1pp reduction in cash rate	Median Value Jan 2025	Decline from market peak to Jan 25
Dural - Wisemans Ferry	17.7%	$910,933	-3.9%
Chatswood - Lane Cove	16.3%	$1,072,102	-4.1%
Campbelltown (NSW)	16.0%	$585,201	-0.2%
Wollondilly	15.1%	$577,936	0.0%
Rouse Hill - McGraths Hill	13.1%	$755,101	-2.3%

Canberra houses

SA3 Name	Modelled value change from a 1pp reduction in cash rate	Median Value Jan 2025	Decline from market peak to Jan 25
Belconnen	2.4%	$881,404.53	-7.2%
Weston Creek	2.3%	$931,993.53	-10.2%
Tuggeranong	0.2%	$881,373.43	-4.0%
Woden Valley	-0.5%	$1,234,091.08	-12.2%
Molonglo	-0.7%	$1,151,125.03	<at peak>

Canberra units

SA3 Name	Modelled value change from a 1pp reduction in cash rate	Median Value Jan 2025	Decline from market peak to Jan 25
Gungahlin	7.0%	$550,893	-8.3%
Tuggeranong	3.4%	$610,830	-8.2%
South Canberra	1.4%	$692,397	-4.9%
North Canberra	0.3%	$568,683	-7.9%
Belconnen	-0.5%	$535,069	-6.2%

Melbourne houses

SA3 Name	Modelled value change from a 1pp reduction in cash rate	Median Value Jan 2025	Decline from market peak to Jan 25
Whitehorse - West	18.4%	$1,430,900	-6.0%
Essendon	18.0%	$1,448,499	-14.8%
Manningham - West	17.4%	$1,439,353	-10.8%
Boroondara	17.3%	$2,402,401	-5.3%
Bayside	16.4%	$2,175,573	-12.5%

Melbourne units

SA3 Name	Modelled value change from a 1pp reduction in cash rate	Median Value Jan 2025	Decline from market peak to Jan 25
Glen Eira	12.3%	$648,425	-11.8%
Whitehorse - West	10.6%	$738,643	-2.9%
Manningham - East	9.8%	$815,581	-13.2%
Maroondah	9.1%	$649,895	-3.0%
Bayside	8.5%	$981,670	-9.1%

Brisbane houses

SA3 Name	Modelled value change from a 1pp reduction in cash rate	Median Value Jan 2025	Decline from market peak to Jan 25
Sunnybank	5.2%	$1,104,630	-1.7%
Nathan	5.1%	$1,282,200	<at peak>
Brisbane Inner - North	4.9%	$1,642,661	-1.2%
Mt Gravatt	4.5%	$1,302,984	<at peak>
Brisbane Inner - West	4.4%	$1,750,183	-1.1%

Brisbane units

SA3 Name	Modelled value change from a 1pp reduction in cash rate	Median Value Jan 2025	Decline from market peak to Jan 25
Capalaba	8.0%	$645,149	<at peak>
Brisbane Inner - West	7.8%	$821,653	<at peak>
Bribie - Beachmere	5.6%	$635,762	<at peak>
North Lakes	5.0%	$608,256	<at peak>
Strathpine	4.5%	$571,676	<at peak>

Adelaide houses

SA3 Name	Modelled value change from a 1pp reduction in cash rate	Median Value Jan 2025	Decline from market peak to Jan 25
Port Adelaide - West	5.1%	$845,446	<at peak>
Gawler - Two Wells	3.3%	$714,507	<at peak>
Mitcham	3.0%	$1,208,890	<at peak>
Onkaparinga	2.5%	$784,588	<at peak>
Tea Tree Gully	2.5%	$821,359	<at peak>

Adelaide units

SA3 Name	Modelled value change from a 1pp reduction in cash rate	Median Value Jan 2025	Decline from market peak to Jan 25
Unley	8.2%	$654,451	-0.3%
Campbelltown (SA)	4.3%	$595,495	<at peak>
Adelaide Hills	2.9%	$575,339	-0.5%
Norwood - Payneham - St Peters	1.9%	$629,908	-0.3%
Prospect - Walkerville	1.8%	$581,073	<at peak>

Perth houses

SA3 Name	Modelled value change from a 1pp reduction in cash rate	Median Value Jan 2025	Decline from market peak to Jan 25
Bayswater - Bassendean	3.1%	$893,976	<at peak>
Perth City	1.1%	$1,572,993	<at peak>
Serpentine - Jarrahdale	1.0%	$748,457	<at peak>
Fremantle	0.9%	$1,353,439	-0.4%
Canning	0.9%	$925,825	<at peak>

Perth units

SA3 Name	Modelled value change from a 1pp reduction in cash rate	Median Value Jan 2025	Decline from market peak to Jan 25
Bayswater - Bassendean	5.6%	$530,905	<at peak>
Mundaring	2.9%	$415,450	<at peak>
Mandurah	1.9%	$477,113	-4.1%
Fremantle	1.2%	$762,802	<at peak>
Cottesloe - Claremont	1.2%	$927,804	<at peak>

Hobart houses

SA3 Name	Modelled value change from a 1pp reduction in cash rate	Median Value Jan 2025	Decline from market peak to Jan 25
Hobart Inner	6.6%	$925,990	-16.6%
Hobart - North East	4.8%	$725,091	-14.4%
Brighton	2.6%	$559,554	-3.9%
Hobart - North West	2.4%	$569,216	-10.9%
Hobart - South and West	0.9%	$793,895	-12.1%

Hobart units

SA3 Name	Modelled value change from a 1pp reduction in cash rate	Median Value Jan 2025	Decline from market peak to Jan 25
Hobart - North West	9.0%	$448,909	-11.8%
Hobart - North East	5.2%	$564,811	-5.8%
Hobart Inner	4.8%	$608,754	-19.0%
Brighton	3.0%	$447,369	-7.8%
Hobart - South and West	0.9%	$553,860	-9.9%

Regional Australia houses

SA3 Name	Modelled value change from a 1pp reduction in cash rate	Median Value Jan 2025	Decline from market peak to Jan 25
Wollongong	12.0%	$1,193,104	-9.1%
Kempsey - Nambucca	9.8%	$624,079	-3.3%
Dapto - Port Kembla	9.1%	$850,071	-0.2%
West Pilbara	8.2%	$577,428	-27.7%
Loddon - Elmore	7.9%	$414,210	-6.6%
Bowen Basin - North	6.6%	$333,120	-10.0%
Lithgow - Mudgee	6.5%	$578,249	-2.4%
Gold Coast Hinterland	6.5%	$1,114,105	-1.0%
Newcastle	6.3%	$989,046	<at peak>

Regional Australia units

SA3 Name	Modelled value change from a 1pp reduction in cash rate	Median Value Jan 2025	Decline from market peak to Jan 25
Southern Highlands	10.7%	$827,970	-9.5%
Maryborough	9.9%	$305,990	<at peak>
Gippsland - East	9.2%	$367,370	-3.4%
Tablelands (East) - Kuranda	8.9%	$325,585	-3.0%
Bunbury	8.7%	$471,644	<at peak>
Coffs Harbour	8.4%	$574,618	-3.7%
Shoalhaven	8.1%	$614,144	-11.4%
Limestone Coast	7.9%	$352,205	<at peak>
Wodonga - Alpine	7.7%	$376,453	-0.8%